State Bank of Hyderabad to raise Rs 1,000 cr

INDIATIMES NEWS NETWORK|

Apr 28, 2007, 05.40 PM IST

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HYDERABAD: State Bank of Hyderabad is planning to raise Rs 1,000 crore Tier II capital if its plans to hit the market with an IPO in the second quarter of this fiscal does not materialize, said Amitabha Guha, managing director, SBH, at a press conference here on Friday.

The bank is awaiting the clearance of SBI Subordinates Act in the monsoon session of the Parliament, which will help the bank hasten the IPO process.

" If the bills is cleared in this session and if the market conditions are favourable, we will look at coming out with an IPO by the second quarter of 2006-07", said Mr Guha. In the event of the failure of the clearance of the bill or unfavourable market conditions, the bank will raise funds of around Rs 1,000 crore for Tier II capital through the issue of bonds, he added. The funds are being raised to meet the Basel II norms and for the capital base needs. " The timeline set by RBI to meet Basel II norms is only March 2009. But in SBI as a group policy we are gearing up to meet the norms by September 2007", he said. However it was too premature to disclose the quantum of funds to be raised or the level equity that would be divested according to him. SBH is now held entirely by its parent SBI. Before going for an IPO, the bank will have to go in for a stock split as the stocks with a face value of Rs 100 have a book value of around Rs 1,400 now, making it too steep for the buyers. Commenting on the hardening of the interest rates and the possible slowdown in credit offtake Mr Guha said, " This year the RBI has predicted an 8.5% GDP growth. The credit needs for infrastructure and other capex sectors need to be met. There does not seem to be a problem in availability of capital and liquidity in the near future. We expect a 24% growth in credit offtake this year with non manufacturing sectors getting lesser priority". --ends--